In the latest seismic shift for the payments sector, Visa and Mastercard have reached a proposed settlement with U.S. merchants that promises to lower interchange (“swipe”) fees and revise the longstanding “honor all cards” rule.

For fintech strategists, product teams, and merchant acquirers, this development is a definitive inflection point in card-economics, acceptance dynamics, and revenue models tied to interchange.

In this article we dissect (TL;DR):

What changes are expected to take place;
Why the changes are happening (regulation, antitrust, competitive pressure);
How these changes affect each stakeholder: networks, merchants/acquirers, banks/issuers, consumers;
What this means for fintechs and enterprises monetizing card spend and interchange revenue.

What’s Changing: Key Elements of the Settlement

The core change centers on a settlement proposal from Visa & Mastercard to merchants that would reduce average interchange fees slightly and loosen card-acceptance rules.

Key headlines have flagged a ~0.10 percentage-point reduction in swipe fees over five years, and a cap of 1.25% for “standard” consumer cards for eight years.

Simultaneously, the networks would permit merchants more leeway to decline certain high-fee card types or impose surcharges.

Details of the change
Here are the major components of the settlement:

A reduction in the average effective credit interchange rate by approximately 10 basis points (0.10%) for five years.
A cap that standard consumer credit-card transactions cannot exceed 1.25% for eight years — contingent on court approval.
Permission for merchants to selectively decline certain premium card products (e.g., high-fee reward cards) OR impose a surcharge when such cards are used.
Relaxation of the “honor all cards” rule — that is, merchants may no longer be required to accept every product under the Visa/Mastercard umbrella.
Additional flexibility for merchants to negotiate rates with individual issuers — though industry pundits question how meaningful this will be for smaller merchants.

In short: while the headline reduction in fees is modest, the structural change around card acceptance and surcharge rights may have outsized implications.

For stakeholders across the payments ecosystem, the ‘devil is in the details’ on how these new rules will be implemented — especially merchants exercising new rights, card types are targeted, and how quickly the court grants final approval.

Why It’s Happening Now: Regulatory, Competitive, Market Forces

To understand why Visa and Mastercard agreed to a new settlement now, it’s important to step back and look at the drivers: (i) decades of antitrust litigation, (ii) mounting merchant pressure, (iii) evolving card-economics (especially reward-heavy premium cards), and (iv) the risk of regulatory intervention.

Driver #1 – Long-running litigation over “swipe fees”
For nearly 20 years, merchants have litigated against networks (and issuing banks) claiming interchange/merchant-discount fees were artificially high and acceptance rules (like “honor all cards”) were anti-competitive.

The proposed deal represents an attempt by networks and merchants to resolve the class-action dispute before further trials that can lead to costs increases and uncertainties.

Driver #2 – Premium-card proliferation and cost pressure on merchants
High-reward cards (e.g., travel-benefit cards) impose higher interchange costs for merchants.

Under the “honor all cards” rule, merchants were forced to accept them even though they cost more.

The new settlement addresses this by allowing some selective acceptance.

Driver #3 – Growing merchant demands for flexibility and cost control
Merchant groups have argued that the networks wield market power and that merchant margins are squeezed by rising card fees.

The major trade group National Retail Federation (NRF) labeled the latest settlement as “window-dressing” because they believe reductions are too small.

Meanwhile, policymakers are increasingly scrutinizing the card-fee ecosystem.

For instance, Dick Durbin (U.S. Senator) rejected the proposed settlement as inadequate and continues to push legislative reform via the Credit Card Competition Act.

Driver #4 – Pre-emptive move by networks ahead of stricter regulation
Visa and Mastercard may be motivated to settle in order to forestall more aggressive regulatory or legislative intervention, thereby preserving control of their fee-setting regime and network rules.

The settlement gives them an opportunity to shape the outcome rather than be forced by Congress or regulators.

This convergence of litigation risk, merchant pressure, reward-card economics, and regulatory threat has driven the networks to propose this settlement.

However, the relatively limited fee reduction suggests their goal may be to keep core economics while offering potential change.

Impact on Card Networks (Visa, Mastercard)

For the card networks — Visa and Mastercard — the settlement represents a balancing act: they want to reduce merchant antagonism and litigation risk while preserving their volume and revenue streams.

Let’s explore how they’re likely to be impacted and what they may do in response.

Revenue and margin implications

The reduction of roughly 10 basis points in average interchange may slightly dent the share of merchant fees funneled through the networks/issuers.
The cap of 1.25% on standard consumer cards for eight years places a limit on fee increases for a substantial card-category segment. However, premium cards (which carry higher interchange) may still retain flexibility outside this “standard” bucket. The networks may shift strategies toward higher-fee premium or commercial cards to compensate.
Network assessment fees (which are distinct from interchange) may not be explicitly constrained by the settlement; thus, networks retain levers to preserve revenue. Merchant groups warn that networks could offset interchange reductions by raising network fees.

Card-product design and segmentation

With merchants able to reject higher-fee card products OR impose surcharges, networks may accelerate segmentation of card tiers (e.g., standard, rewards, premium, commercial). They’ll likely work with issuers to promote premium-reward cards that justify higher interchange and fees.
Networks may increase focus on value propositions that justify higher fees: e.g., richer travel benefits, concierge services, partner merchant rebates. This helps lock in issuer/consumer demand and manage interchange levels.
The networks will also focus on acceptance ubiquity and network scale: if card programs become less widely accepted (because merchants reject certain tiers), networks risk weaker value-propositions for consumers and issuers. They may invest further in digital wallet, tokenization and international volume growth to compensate.

Acceptance rules and merchant relation shifts

This settlement gives merchants more power — to impose surcharges or decline cards with higher fee burdens — which shifts the negotiating leverage slightly away from networks/issuers and towards merchants. Networks will need to manage merchant relations more actively to maintain broad acceptance and favorable fee tiers.
Networks may incur higher complexity and cost in configuring and communicating acceptance rules, monitoring surcharge tiers, and product-level treatment. They may also face a new wave of merchant contract negotiation and segmentation.

Risk and regulatory execution

The settlement, while avoiding a larger trial and potential antitrust verdict, still commits the networks to court approval and implementation risks. If the settlement falls through, they remain exposed to litigation.
They must handle consumer-experience risks: if consumers find their premium cards declined or surcharged, there’s reputational risk. Networks must manage messaging and potential backlash from issuers/consumers.

For Visa and Mastercard, the settlement is a strategic concession that keeps the core model intact while conceding merchant flexibility.

How well they manage the transition — especially product segmentation, merchant negotiation, and consumer/issuer expectations — will determine how much their long-term economics are impacted.

Impact on Merchants & Acquirers

Merchants (from large retail chains to small ‘mom & pop’) stand to gain both opportunities and new complexities from the settlement.

Likewise acquirers (merchant-service providers) will need to adapt pricing, acceptance strategy and merchant communications.

Potential benefits for merchants

Slight interchange fee reduction (~0.10%) can translate into meaningful savings for high-volume merchants, especially those with large card spend.
The ability to decline certain high-fee card products or impose surcharges gives merchants leverage to manage costs and payment-method mix. For example, a merchant may decide not to accept ultra-premium travel-reward cards if the interchange burden is too heavy.
Merchant education and negotiation rights (with individual issuers) may open new cost-control levers.

Challenges & caveats

For many smaller merchants, the interchange reduction may be negligible: unless there’s sufficient volume (or merchant-issuer leverage), the benefit may be minimal.
If merchants begin rejecting premium cards or applying surcharges, they risk consumer backlash, negative PR or competitive disadvantage — especially if a competitor continues to accept them seamlessly.
Complexity may rise: merchants must update terminal systems and checkout rules to reflect new acceptance/surcharge regimes, and communicate changes to consumers. This imposes operational overhead.
Differentiated pricing may confuse consumers and friction at checkout could increase. Some customers may interpret surcharges or decline as negative experiences, potentially reducing loyalty.

Acquirer implications

Acquirers will need to revisit merchant contracts: pricing models, interchange pass-through or margin offers, surcharge capabilities and checkout messaging.
They may design new tiers or contracts enabling merchants to accept only lower-fee cards, apply surcharges, or manage acceptance mix proactively.
Acquirers must train merchant clients, update terminals or software, and integrate merchant rules about card acceptance; they may also need to manage disputes/tracking of surcharges to ensure compliance with state laws.
Smaller/acquiring firms may seize an opportunity: help merchants navigate the new flexibility and positioning themselves as value-added payment-advisory partners.

Merchants and acquirers are positioned to benefit from new flexibility and modest cost relief, but success depends on how they execute.

Volume matters, acceptance strategy will change, and operational burden may temporarily increase. Merchants who plan and communicate proactively will be better placed to extract value.

Impact on Issuing Banks & Consumers

Issuing banks and consumers are two sides of the same coin in the card-ecosystem.

Issuers fund rewards and card enhancements — consumers chase incentive-rich cards.

The settlement will impact both areas — card portfolios, rewards economics, and consumer behavior.

Effects on issuing banks

If interchange fees (the primary revenue source for many credit cards) are reduced, issuing banks may see margin pressure — especially on standard consumer cards. The 1.25% cap and 10-basis-point reduction limit upside.
To sustain revenues and rewards programs, banks may escalate emphasis on premium/reward-rich cards (which may fall outside the “standard” cap and could command higher interchange). This could widen segmentation between standard cards and premium ones.
Banks may tighten underwriting or benefits on mid-tier cards, focusing their economics on affluent cardholders who spend more and pay higher interchange burden.
Issuers may renegotiate with networks on fee allocations, push for higher network incentives, or shift business toward co-branded/accent-value cards where margins are stronger.

Effects on consumers

Cardholders of standard consumer cards likely experience little immediate change as fees remain stable in the near term. But reward-cardholders could face indirect impacts, especially if merchants reject or surcharge premium cards — diluting the attractiveness of those cards.
Consumers may see checkout friction: e.g., a premium card is declined at a merchant that opted out, or a surcharge is added to use a higher-fee card — which can lead to consumer dissatisfaction or behavior change.
Over time, some issuers may reduce reward generosity on base consumer cards, or shift benefits to premium tiers — affecting consumer choice and loyalty.
Consumers might gravitate more toward debit cards, alternative payment rails or lower-fee credit-card products, if acceptance becomes patchy or surcharges become common.

Issuers will need to revisit product strategy and ensure margins hold up.

Consumers may eventually see reward-card programs shift, plus possible checkout friction or surcharges.

The net consumer-experience effect will hinge on how widely merchants exercise their surcharge/decline rights and how issuers and networks respond.

Implications for FinTechs and Enterprises Monetizing Card Spend

For fintech companies and enterprise platforms leveraging card spend, interchange revenue share, and embedded-banking models, the settlement creates both risks and opportunities.

In the embedded-finance ecosystem, the ripple effect of lower interchange or acceptance shifts must be factored into go-to-market (GTM) strategy, pricing, product design, and partner strategy.

Interchange-monetizing models under pressure

Many fintechs structure programs where interchange (paid by the merchant acquirer/processor) is shared with the issuer or program manager, and a portion is directed to the fintech platform as revenue. With a fee reduction (even a small one), the base revenue pool shrinks.
If merchants shift away from high‐fee card types (or surcharge/decline them), the volume of premium-card transactions might drop or switch to lower-fee alternatives — further reducing interchange yield.
Enterprises that bundle embedded banking (card issuance, processing, rewards) will need to re-model economics: interchange margins may be lower or more variable across product tiers.

Opportunity – product differentiation & segmentation

Fintechs can use this moment to design differentiated card tiers: explicit “standard” vs “premium” models, with clearer fee/revenue share economics, transparent surcharge practices, and merchant-friendly acceptance rules.
For embedded-finance platforms targeting SMBs/merchants, the new flexibility to surcharge OR reject high-fee cards can be packaged as a value proposition: help merchants optimize card acceptance mix, reduce cost, and pass savings to consumers or bottom line.
Fintechs can develop analytics tools for merchants: identifying high-interchange cards, forecasting cost impact of rejecting/surcharging, advising on checkout strategy and customer retention.
Fintech-embedded platforms can consider alternative rails or hybrid models (e.g., push incentives for debit, open-banking pay, or lower-fee credit cards) to capture volume and margins in a more merchant-friendly way.

Enterprise GTM & partnership implications

Embedded-banking infrastructure platforms should proactively engage clients (banks, issuers, fintechs, merchants) with scenario-planning: What if our interchange yield drops 0.10%? What happens if merchants begin surcharging premium cards? Which verticals are most at risk (e.g., merchant sectors sensitive to high reward-card usage)?
In partnerships where fintechs share interchange revenue with banks/issuers, clear contract updates and forecasting will be vital. Some deals may need re-negotiation (especially if product mix shifts).
For enterprise clients (large-scale merchants or acquirers) the loosening of acceptance rules opens new negotiation levers. Fintechs serving these enterprises can position themselves as value-added payment strategy advisors — e.g., helping select which card tiers to accept, how to encourage lower-fee card usage, how to implement surcharge messaging and checkout user experience updates.

Risk management & execution complexity

Fintechs must monitor implementation timing: the settlement is still subject to court approval, and actual rollout may take months or years. As such, product roadmaps should build in flexibility rather than assumption of immediate change.
Tracking merchant-specific acceptance rules (which cards merchants accept/surcharge) will become more complex. Fintechs must support dashboarding for issuers/merchants to monitor acceptance rates, customer friction, and card-mix shifts.
Fintechs must watch regulatory and legislative developments. The Credit Card Competition Act remains in play, and networks/issuers may respond with new fee models, reward changes, or routing innovations.

For fintechs and enterprises, this moment is both cautionary AND opportunistic.

While interchange revenue and card-economics face headwinds, those who proactively re-design programs, coach merchants on acceptance optimization and position themselves as strategic advisors will gain an edge.

Embracing the shift rather than resisting it will differentiate winners from laggards.

Looking Ahead: What to Monitor in 2026 and Beyond

As the payments ecosystem digests the settlement and transitions to new acceptance/fee rules, several key areas should be closely monitored by stakeholders to stay ahead of the curve.

Key monitoring points

Court approval and implementation timing – The settlement must be approved by the federal court and only then will the rules take effect. Some estimate that uptake may begin late 2026 or early 2027.
Merchant adoption of surcharging/declining premium cards – Will merchants actually choose to reject high-fee card products or impose surcharges? Early signals will tell. If adoption is weak, the theoretical flexibility may not translate into material cost savings.
Behavior of network & issuer responses – Will networks raise other fees, or will issuers restructure reward programs in response to reduced interchange flexibility? The product mix may shift toward higher-fee categories or other monetization models.
Impact on consumer card-experience and loyalty – If consumers experience decline of premium cards at checkout or surcharges, reactions may include card churn, behavioral shifts (towards debit or alternative rails), or demand for simpler/cheaper cards.
Regulatory & legislative moves – The settlement may reduce acute litigation risk, but broader reforms (such as the Credit Card Competition Act) remain on the horizon. Stakeholders should track legislative momentum.
Embedded-finance program economics – Fintechs and enterprises must monitor actual interchange yield, card mix shifts, and acceptance behaviors to ensure business models remain viable or are adapted timely.
International comparisons & competitive pressure – As other jurisdictions (e.g., Europe, Australia) move to cap interchange or ban surcharging, U.S. networks may face global pressure — watching cross-border developments may provide insight.

The next 12–24 months will be critical in seeing whether this settlement truly alters card-cost economics or simply marks a tweak around the margins.

Entities that stay alert, test scenarios, and build flexible programs will navigate the transition better than those locked into legacy models.

7 Strategic Recommendations

Whether you’re a payments leader, banking program manager, merchant acquirer, or fintech executive — now is the time to act.

Below are actionable recommendations.

Re-model interchange assumptions – Adjust financial forecasts to reflect the modest interchange reduction (~10 bps) and uncertainty around acceptance changes. Quantify impact on revenue, business cases and card-issuance economics.
Segment card product tiers – Distinguish between “standard consumer”, “reward/premium”, “commercial” cards. Work with issuers or partners to understand which fall under the 1.25% cap and which may be outside.
Design merchant acceptance strategy – For merchant-facing fintechs/acquirers: build acceptance-mix analytics, help merchants evaluate whether to decline higher-fee cards or apply surcharges, and support checkout-UX changes.
Educate cardholders – Issuers and fintechs must communicate potential changes proactively: e.g., if a card may be declined at certain merchants or surcharge applied, ensure transparency so consumer loyalty isn’t harmed.
Monitor policy & legal shifts – Keep tracking judicial progress of the settlement and legislative movement (e.g., Credit Card Competition Act). Embed scenario-planning into your roadmap.
Leverage alternative payment rails – If card economics become less favorable, explore debit, open banking, real-time payments or merchant-direct models. Make sure to diversify revenue streams beyond interchange share.
Position as payments-strategy advisor – Fintechs that help merchants optimize the complex new landscape (card-tier mix, acceptance policy, surcharging strategy) can differentiate their value. Offer consulting, dashboards, and A/B testing of acceptance policies.

The settlement is not a radical disruption, but it signals a pivot point.

Entities that treat it as a moment for strategic recalibration — rather than business-as-usual — will be best positioned for success as card economics evolve in 2026 and beyond.

Wrap Up

The proposed settlement between Visa and Mastercard and U.S. merchants marks a meaningful shift in the payments ecosystem.

On one hand, the interchange fee reduction (~0.10%) is small — on the other, the acceptance-rule changes (surcharge rights, selective card acceptance) carry greater structural risk and opportunity.

Networks will work to maintain revenue and premium-card value while adapting to new acceptance flexibility.

Merchants gain more levers to manage cost, but also face new complexity and consumer-experience risks.

Issuers and consumers may see gradual changes in card-product economics and checkout behavior.

Fintechs and enterprises must pay close attention: models built on interchange share need recalibrating, and those who can help merchants navigate this new terrain stand to gain.

As we move into 2026, the real test will be whether merchants actively exercise their new rights, whether networks/issuers respond with strategy shifts, and whether consumers feel any material change.

For key industry stakeholders (i.e. GTM strategists, product builders, execs), now is the time to plan, model, and act.

How the New Card-Network Settlement Reshapes Card Acceptance, Fees, Revenue Economics